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Google Car – Why It Might Work … And Why It Might Not

Google (GOOG) has been working on its driverless car project for nearly a decade, and it has progressed to the point that several states are allowing the autonomous vehicles — along with their human co-pilot/passenger on roads.

Google Car from GOOG loses the steering wheel

Pretty impressive, but now Google has taken the next step toward true computer control. It unveiled a new version of its Google Car that loses the traditional controls altogether.

No gas pedal, no brake pedal, no steering wheel.

In its official blog post announcing the new prototype of its self-driving Google Car, the company outlines a few of the reasons why it is doing this:

“Just imagine: You can take a trip downtown at lunchtime without a 20-minute buffer to find parking. Seniors can keep their freedom even if they can’t keep their car keys. And drunk and distracted driving? History.”

Sounds great. But what are the odds we’ll actually see a commercially produced Google Car on the roads?

Google Car: Why It Could Work

For as sci-fi as a self-driving Google Car seems, there’s actually a laundry list of reasons why it could actually work, or is appealing enough to get much-needed support:

Safety: According to the latest Centers for Disease Control and Prevention Stats, more than 33,000 Americans die annually in motor vehicle accidents. Add the 2.2 million passenger injuries and 116,000 non-occupant injuries reported by the U.S. Census (2009 figures), and the $99 billion yearly the CDC says those collisions cost and it’s clear that crashing vehicles are a deadly and expensive issue. Taking human error out of the equation should greatly reduce those numbers.

Easing Traffic: Traffic congestion and gridlock plague cities, but expanding highway systems is time-consuming and expensive. But it might also be unnecessary if Google Cars became the norm. Human drivers cause much of the congestion through poor driving habits such as rubbernecking as they pass accidents, merging incorrectly, improper lane use and aggressive or slow speeds. (Raise your hand if you’re guilty.) For example, Toronto drivers face one of the worst commutes in North America at an average of 80 minutes, but the Toronto Star’s San Grewal interviewed a traffic expert who says improving driver behavior could reduce that congestion by 25 to 30%. The Google Car — programmed to follow the rules of the road and react to other cars — would be the ultimate solution to bad driver behavior, and thus help traffic flow.

Productivity: Productivity also would be boosted. Think of the time you spend commuting in you car today and imagine if that time was not only reduced, but you had the option of reading a book, checking email, writing a report or watching a movie while in transit. With a self-driving car, everyone becomes a passenger, and distracted driving is no longer a concern.

Google Car: Why It Might Not Work

Human Control: One of the largest obstacles for a driverless Google Car to overcome is a deep-rooted desire for people to remain in control. Earlier generations of Google’s driverless cars were a modified Toyota (TM) Prius, so a human could always grab the steering wheel and take over control of the vehicle. The new prototype Google Car lacks any physical controls a human could use. There is a psychological barrier about relinquishing control — be it the “freedom of the road,” or a more serious concern about having a computer control the whole transportation experience — that Google will have to alleviate.

Hacking Concerns: Even today’s cars are increasingly vulnerable to hacking as they adopt computer-controlled components. What happens when the entire vehicle is computer-controlled? Waves of self-driving cars commandeered by cyber-savvy terrorists while their human occupants are powerless to regain control … that’s a nightmare scenario.

Legal Issues: Who is liable if a Google Car hits someone? Google? The car owner? What if a self-driving Google Car collides with a human-driven car? I don’t view this as too much of a roadblock, but it’s something that will have to be sorted out.

Opposition by Vulnerable Industries: More worrisome is the pushback from industries that would be disrupted by the self-driving Google Car. According to a report published by IBISWorld, the U.S. auto insurance industry is a $199 billion juggernaut. It’s driven by auto insurance premiums, which are in turn driven by rate tables based on regional and driver demographic accident rates. What happens when there is no driver and computer-controlled vehicles help to reduce or eliminate regional accident rates?

Opposition by Automakers: The U.S. auto manufacturing industry is more than a century old, is worth billions upon billions of dollars and accounts for 1 in 17 private-sector jobs in this country. Maybe GOOG would license the technology to automakers like General Motors (GM) and Ford (F) (it certainly couldn’t build all those Google Cars itself), but the industry still would face disruption. For one thing, those extra-profitable sports cars would likely become a thing of the past –who cares if a car is capable of faster acceleration if the computer driving it is programmed to adhere to the same rules as every other car on the road? If you thought Tesla (TSLA) had auto dealers in a froth, the havoc a mass-market Google Car would wreak would likely be a hundred times worse.

Lost Revenue: While law enforcement officials would be more than happy to see automobile-related deaths and injuries reduced, they would have some scrambling to do in order to make up the revenue lost because of law-abiding driverless cars. Network World’s Colin Neagle points out that Google’s driverless cars have received zero traffic citations in 700,000 miles. Meanwhile, 41 million speeding tickets are issued to American drivers each year, to the tune of $6.2 billion in fines. That’s speeding tickets alone. A lot of revenue will have to come from somewhere — either that, or fewer police officers will be on the roads.

Bottom Line

Although Google says it has logged more than 700,000 miles with its self-driving cars, it’s still a long way from commercializing the technology. The new Google Car is likely the first in a long line of prototypes.

In the meantime, based on the complexity of the pros and cons of letting a computer take over, we’re going to need that time to figure this whole driverless cars thing out.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2014/05/google-car-driverless-cars-goog/.

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